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- Publisher
- Springer Journals
- Copyright
- Copyright © 2002 by Kluwer Academic Publishers
- Subject
- Business and Management; Accounting/Auditing; Corporate Finance; Public Finance
- ISSN
- 1380-6653
- eISSN
- 1573-7136
- DOI
- 10.1023/A:1020764227390
- Publisher site
- See Article on Publisher Site
Abstract
We propose and implement a new method to estimate the relation between R&D investments and the uncertainty of future benefits from those investments. The empirical analysis compares the relative contributions of current investments in R&D and PP&E to future earnings variability using a sample of roughly 50,000 firm-year observations from 1972–1997. Evidence is strongly consistent with the hypothesis that R&D investments generate future benefits that are far more uncertain than benefits from investments in PP&E. Our results should help the current discussion on accounting for R&D and the methodology might be helpful in standard setting in other contexts as well.
Journal
Review of Accounting Studies – Springer Journals
Published: Oct 21, 2004